The case for uranium today is perhaps the strongest it has been in a decade
As mentioned in the introduction, governments around the world are increasingly realizing the importance of reliable, carbon-free power generation.
Nuclear power emits nearly 70 times less carbon dioxide than coal, making it significantly less carbon intensive than fossil fuels. In the meantime, costs for nuclear power plants tend to be quite low, given the minimal amount of material needed to power the plant.
In this context, it is not surprising to see some countries hinting they are (re)considering nuclear developments for the coming decades.
In the US, Energy Secretary Jennifer Graham recently stated that “Nuclear energy is essential to confronting the crisis of our lifetime: climate change”.
In France, President Emmanuel Macron recently announced a 1 billion Euro investment into developing Small Modular Reactors for hydrogen production and export.
At the same time, the energy crisis in Europe has forced politicians and citizens to recognize the inescapable logic of nuclear energy. Features such as 24/7 reliability, resiliency of production in all weather conditions, price stability and superior energy security have put new nuclear construction back on the agenda.
In Japan, recently elected Prime Minister Fumio Kishida has stated that it is crucial to re-start nuclear power plants.
As Bloomberg reported this week, China is planning at least 150 new reactors in the next 15 years, more than the rest of the world has built in the past 35.
Uranium as an ESG investment
ESG funds have recorded very strong capital inflows in recent years and uranium could become a new destination for these flows.
Indeed, nuclear will probably be qualified as a green investment label within the framework of the EU’s sustainable finance taxonomy. This could change the perception on the sector, as it is possible that many investors have stayed away from uranium for exclusion / eligibility reasons.
In the United States, Joe Biden’s $ 2 billion “Green New Deal Style” infrastructure plan has created a new ARPA Climate Agency that has prioritized the development and deployment of nuclear reactors. In addition, the Senate last year approved the U.S. Nuclear Infrastructure Act, designed to boost the U.S. nuclear industry, establish a strategic uranium reserve, support improvements in the U.S. nuclear fuel cycle, and encourage exports of nuclear fuel. American reactors around the world.
How to get invest into the Uranium story
For investors looking for straightforward exposure to physical uranium, the aforementioned Trust is probably the only available option. The Sprott Trust currently trades on the Toronto Stock Exchange under the tickers U-UN (Canadian Dollars) and U-U (US Dollars). The Trust trades at a discount or a premium to net asset value, and it can be quite volatile.
Several uranium mining stocks ETFs are available such as the Global X Uranium ETF (URA) and the North Shore Global Uranium ETF (URNM) – see chart below.
Chart: Global X Uranium ETF and NorthShore Global Uranium Mining ETF
